Ask HN:How will Bitcoin futures affect the actual price? I don't understand how, since the Futures contracts do not get settled in Bitcoin, the for example, shorting of Bitcoin Futures, will affect the actual price. Can someone explain? |
Ask HN:How will Bitcoin futures affect the actual price? I don't understand how, since the Futures contracts do not get settled in Bitcoin, the for example, shorting of Bitcoin Futures, will affect the actual price. Can someone explain? |
This could create some 'tail-wags-dog' behavior, but at this point it is anyone's guess how this will play out.
If someone has funds on both, they can sell on the bitcoin exchange and buy on the futures exchange to make $1K profit without changing their exposure, 'risk free'.
Unlike other kinds of arbitrage, however, because the futures settle in USD value, you'd have to move that USD to the exchange and rebuy to get back into a position to repeat. I think settling in USD will somewhat suppress the effect of futures market short pressure (have to rebuy to sell again, unless on exchange with naked shorts available to users with only USD balances), but only time will tell.